奈飞：用户肯付钱，却看得少了

By almost every number Netflix itself publishes, the company's business could not be better.

Profit margins are on track for a record high, cash is pouring in, and its cancellation rate is still the lowest in the industry.

Yet the stock sits at $63.22, down 52.8% from its all-time closing high.

What unsettles investors is another set of numbers.

According to Wells Fargo's estimates, the average user now spends about 9% less time watching Netflix than three years ago.

At the same time, the company cut its 2026 advertising revenue forecast from $3 billion to around $2.7 billion.

The company attributes the cut of roughly one-tenth to delays in launching its ad technology and to the promotion and integration of some new ad products not being completed on schedule.

Co-CEO Greg Peters said the company set a very ambitious growth target for its ad business this year.

He acknowledged that it is still a little short of that aggressive goal.

The real pressure comes from another direction.

Nielsen data shows YouTube is now the platform drawing the most viewers on American TV screens, with a viewing share about twice Netflix's.

Barclays analyst Kannan Venkateshwar argues the industry has shifted from content scarcity to attention scarcity.

The most direct way to counter attention scarcity is to add more ads, yet Netflix keeps its ad load very low.

It runs only about 2.4 minutes of ads per hour, while Hulu and Disney+ run around eight minutes.

Brian Wieser of Madison and Wall believes more advertising would damage the brand.

The most reliable way to get people to watch more is to spend more, but spending more directly squeezes profit margins.

If the acquisition of Warner Bros. had gone through, it would have amplified this approach at a much larger scale, but that deal ultimately did not happen.

Raising prices is another route, and it pushes users toward the $8.99-a-month ad-supported plan.

But until ad sales catch up, that plan actually earns less money from each member.

Wells Fargo expects advertising to contribute more than a third of Netflix's revenue growth next year.

Notably, this scrutiny is, to some extent, something Netflix brought upon itself.

When it stopped reporting subscriber numbers last year, its stated reason was that engagement is the best measure of user satisfaction.

Now that engagement has stalled, the company plans to start reporting this data once a year instead of twice a year beginning next year.

Netflix is no stranger to downturns.

When it lost subscribers in 2022, it launched a cheaper ad-supported plan while cracking down on password sharing.

It survived that round, and the stock subsequently rebounded strongly.

This time, its response is to restructure its content team.

Next year will bring the Narnia film, as well as new seasons of Bridgerton and Wednesday.

Steven Cahall of Wells Fargo believes Netflix deserves the valuation of a hit-driven media company like Disney.

That is, a price-to-earnings ratio of around 15, while it is currently already around 17.

Wieser believes around 20 is a reasonable optimistic scenario, but the level of around 30 seen earlier this year will likely be hard to recapture.

Laura Martin of Needham points out that nearly all of Netflix's revenue still comes from a business that has already matured.

Traditional media giants take a hit and monetize it repeatedly through theaters, merchandise, theme parks, and licensing.

She warns that artificial intelligence will let YouTube creators make better and longer videos for the same money.

For Netflix, advertising was originally just the icing on the cake, but now it has become the part of growth that must be delivered on time.